S.C. Energy Security Act Bad for Business

Frank Knapp/SC Daily Gazette

This past February, the South Carolina House had its first public hearing on House Bill 5118, dubbed the SC Energy Security Act, which had been introduced only 12 days earlier. The bill called for the Legislature to authorize the construction of a large natural gas plant to address the energy needs of the state.

At that hearing, the chair of the subcommittee said that the committee and staff had worked for 18 months on the legislation.

“We have tried to be very diligent in bringing all the stakeholders to the table.”

That simply wasn’t true. No organizations representing ratepayer interests were asked to the table.

Buried in that massive bill was the explanation as to why no consumer-oriented groups had been asked to weigh in on the drafting of H.5118.

The utilities, and their legislative supporters, didn’t want them to know what all was in the bill.

H.5118 is anti-consumer regulatory reform masquerading as solving an energy security problem.

The purpose of the bill, according to the utilities and their legislative supporters, was for the Legislature to authorize the building of needed new energy generation. Many legislators have succumbed to that top-line message and given a pass to what else is in the bill.

However, whether a gas plant is built or not, the long-term negative impact of H.5118 will be putting the Public Service Commission and the regulatory process under the heavy influence of the private utilities.

The bill would essentially fire all the current commissioners and replace those seven with only three commissioners. This would allow for higher pay to incentivize experienced utility-friendly candidates to seek those commissioner positions. Those candidates would surely be approved by the Legislature.

Cutting the number of commissioners by about 60% will also have the negative impact of throwing diversity on the commission out the window — diversity that benefits consumers.

The bill also fires the state consumer advocate from representing consumers in the regulatory process.

Finally, the bill again gives the Office of Regulatory Staff responsibility for being concerned about the financial health of the utilities, reversing a change made after the failed nuclear project that has and will continue to cost ratepayers billions. The result of this change can only benefit the utilities.

If H.5118 passes as is, residential and business consumers in the future will pay higher energy utility bills, much higher than they would have if H.5118 had not passed.

Since 2002, I and the South Carolina Small Business Chamber have been representing the interests of the small businesses in 14 cases before the Public Service Commission. In 10 of these, we fought against rate increases for small businesses.

The current and fair regulatory process has enabled us to successfully cut proposed rate hikes on small businesses by up to 50% or more. That’s because the independent-minded commissioners listened to the facts and understood that they should be concerned about consumers as well as utilities.

All of that goes out the window with H.5118.

Our ability to successfully represent small business ratepayers in future proceedings will be greatly reduced.

If H.5118 passes as is, consumers will suffer. But we didn’t get to make that case in the House.

We didn’t get to make that case at last week’s Senate subcommittee hearing on H.5118 either. No organization representing consumers was permitted to speak. But for 1 ¾ hours we heard a lot from the utilities and a provider of solar energy.

That subcommittee sent H.5118 to the full Judiciary Committee without considering any amendments.

The House took 18 months and 12 days to write, amend and pass H.5118. The Senate has only taken three days to receive H.5118 and move it to the Judiciary Committee.

The utility game plan of pushing the message of energy security and their strong influence on the Legislature has worked.

If energy security was really what H.5118 was about, the bill could have greenlighted the gas plant and left all the bad regulatory reform out.

Authorizing Dominion Energy and Santee Cooper to jointly build new generation is not the problem. In fact, Duke Energy Carolinas should be included and encouraged to share the risks and benefits of any new generation facility.

But the utilities also demanded more control over the regulatory process and, so far, the Legislature is giving it to them.

Ratepayers will simply have to pay the price.

Frank Knapp Jr. is the president, CEO and co-founder of the South Carolina Small Business Chamber of Commerce.